The Intrinsic Value of Digital Commodities

Bitcoin is more than just a digital commodity. It is more than just digital currency. In context it is the first application of many to the distributed consensus asset ledger.The protocol is a frictionless digital api for trading and storing scarce resources of virtually any magnitude.

Bitcoins, altcoins, stocks, gold, programmers, or any asset; are valuable because they are scarce within context. Any commodity is valuable in relation to the context of it’s existence. Ask anyone who has ever bought an item in Farmville, an extra life in Candy Crush, or upgraded their player in Temple Run.

The reason why a digital commodity such as Bitcoin has intrisic value is because of the protocol it operates within. There is no central authority or fiat distributor. As a result there is a finite number of Bitcoin therefore it will eventually become scarce and there is no way of insolvency. The distribution of more bitcoin is derived from mathematics. The intrinsic value is in the technology that enables the protocol and facilitates the distribution of any scarce asset; digital or physical.

Many people say that bitcoin will be bigger than the internet.The value of the http protocol is in the applications built on it such as e-mail, PaaS, e-commerce, streaming media. The value of the bitcoin protocol will also be in the applications built on it. Anything that removes barriers and friction in operations will in time become more valuable.

It is about speed, and cognitive ease. In a recent article I read, the key to making a fortune online, EvWilliams told the XOXO crowd, is to remove extra steps from common activities.

“Take a human desire, preferably one that has been around for a really long time…Identify that desire and use modern technology to take out steps.”

People who understand how to channel that tendency will be disproportionately powerful. When adopted, Bitcoin will provide the most efficient, effective, and secure means of global finance organization, communication, automation, and ultimately connection.